An empirical study on the effect of green management certificate on residential housing prices in Hong Kong

Abstract

BEAM Plus and Green Building Award are the two prominent voluntary green building certification systems in Hong Kong that offer assessments of building sustainability performance. While it has been a common misconception that environmental protection and economic benefits cannot coexist, there has been a growing number of green certification schemes worldwide that are aimed at promoting sustainable building practices throughout a building's lifecycle. This study examines the impact of green management certification on residential property pricing in Hong Kong. Using a hedonic pricing model, this study analyzed over 74,000 transactions in three selected districts: Tseung Kwan O, Sha Tin, and Kau To Shan. It is found that green building certification generates additional price premiums on residential properties, despite the occurrence of shortterm initial price discounts upon certification in some districts, which could be attributed to the delay in acknowledgement of green labelling by potential buyers, and the time required for full implementation of green practices and to be appreciated by residents. However, over the medium term, the green labelling effect was realized as a positive price premium in all research districts, indicating that such effect takes time to actualize. The study also found observable differences in response towards green certification from buyers of the mass market and luxury market. As previously found in the literature, the premium is less significant in opulent housing districts compared to mass apartment districts, showcasing the higher willingness of mass housing market buyers to pay larger premiums for certified properties. Furthermore, there was no apparent variation in the additional pricing effect brought by the two distinctive green labelling systems. The significance of this study is significant on various stakeholders in the market, including policymakers, property managers, academia, and investors. As the first study that investigates on the green certification effect particularly on property management field, this research provides insights for policy makers to promote sustainable practice by refining green labelling systems and stimulating green buildings demand; provide implications for property managers for confirming the value-adding capabilities of green management certification; examines the respective impact of the two local distinctive green building mechanisms; and provides investors and home buyers with investment recommendations regarding the local sustainable development.